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The battle to prove just cause doesn't end with termination. Employers can rely on new grounds and win in court even if those grounds are discovered months, or even years, after the termination. But it requires doggedness and determination.

Shelly Harrigan demonstrated that tenacity and won. After inheriting Vancouver-based Harrigan Rentals and Equipment from her late father, Harrigan, who had little experience in the business, relied on Kenneth Campbell, its financial controller.

His compensation for this was a company gas card that Harrigan told him was for personal use.

Several years later, Harrigan stumbled upon evidence Campbell had been using the gas card for his wife's vehicle. When she confronted him, he said he believed he understood the card to be in lieu of a pay increase.

Harrigan asked him to leave the workplace pending investigation.

She began scrutinizing Campbell's expenses and discovered he had also submitted medical expenses on behalf of his wife, although they were separated. Harrigan believed the wife did not qualify for payment of these charges and that Campbell would have known that.

She fired Campbell for just cause, but kept digging for evidence of wrongdoing. Constance Henry, Campbell's successor, was asked to review his accounting records.

Henry discovered Campbell had taken two salary advances.

She also found that despite being aware of a significant variance between the accounting records and the inventory count, Campbell directed staff to accept the higher figure, inflating the inventory's value, thereby undermining the integrity of the company's financial reporting.

Campbell, meanwhile, sued for wrongful dismissal and went to trial. But Harrigan's persistence paid off.

Of the original grounds for dismissal, Justice William Ehrcke of the British Columbia Supreme Court found Harrigan's direction on the use of the gas card was ambiguous. Even she had used her gas card for personal use, so Campbell could reasonably be excused for doing likewise. Similarly, the allegation of mischarging medical expenses did not hold up: Campbell had reasonable grounds to believe his spouse, albeit estranged, could still claim medical expenses to be reimbursed by the insurer.

However, the judge did find that the new grounds of unapproved salary advances and inflated inventory were so serious they amounted to just cause. And it did not matter that they had been discovered after termination.

The court was outraged Campbell had advanced his salary without authorization. While the advances appeared on the records and were repaid, it did not diminish the gravity of his offence.

The court was unsympathetic to Campbell's claim that the practice of inflating the inventory had been approved by the deceased owner. Even if that were true, he had an obligation to draw it to Harrigan's attention when she took over. Campbell's lawsuit was dismissed.

The lessons for employers speak to the importance of a strategic approach to firing for cause and an aggressive stance in defending wrongful dismissal actions:

Anticipate the defences Harrigan should have thoroughly interviewed Campbell before dismissing him. This would create an objective transcript, reducing the element of surprise in the trial and eliminating newly developed excuses after the employee retains counsel.

Record interviews In this case, the court was faced with divergent versions as to what Campbell said in his defence to the gas card allegations. In the absence of a recording, the court sided with the employee.

Do the legwork before termination The court determined there was no evidence that an employee could not claim insurance benefits for a separated spouse. That issue should have been sorted out before the dismissal.

Take a hard look The courts require employers to apply a principle of proportionality to an employee's wrongdoing. Even if the employee has misbehaved, it must be sufficiently serious to amount to cause. Harrigan assumed a considerable risk by relying on her original grounds for termination.

Follow the pattern Harrigan instinctively understood the old Québécois saying that "Three follows two." Because dishonesty is rarely isolated, every aspect of an employees's work, including expense claims and work reports, should be scrutinized even after firing. I maintain that if you find dishonesty in one area, you are bound to find it in several.

Howard Levitt is senior partner of Levitt & Grosman LLP (levittgrosman.com), employment and labour lawyers. He practises employment law in eight provinces and is author of The Law of Dismissal in Canada. Employment Law Hour with Howard Levitt airs Sundays at 4 p.m. on CFRB in Toronto.

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